1. What is family property?
Section 84 of the Family Law Act defines family property. As per V.J.F v S.K.W,, 2016 BCCA 186 at para 8, the definition of family property is very broad.
Family property is all real property and personal property in which on the date of separation one spouse owns or has a beneficial interest.
- Real property is land or anything that is attached to land. In a family proceeding, a matrimonial home, bare land, an apartment and a townhouse can be considered as real property.
- Personal property is property that is moveable. In a family proceeding, personal property could be vehicles, jewelleries, furniture, paintings, etc.
Some specific examples of what can be considered as a family property include income tax refunds that are derived from income tax remitted prior to separation are considered family property (Byrne v. Byrne, 2015 BCSC 318 at para 55); and trust property where a spouse has a beneficial interest at the date of separation (S.L.M.W. v. M.R.G.W., 2016 BCSC 272).
2. What is each spouse entitled to?
Pursuant to section 81 of the Family Law Act, on separation, each spouse is generally entitled to an undivided half interest in family property as a tenant in common (V.J.F v S.K.W,, 2016 BCCA 186 at para 10). The court may divide the family property unequally if equal division is “significantly unfair” in considering the factors that are listed in section 95 of the Family Law Act. This is a high bar.
In Singh v Singh, 2020 BCCA 21 at paras 129 to 134, the Court of Appeal addressed the meaning of “significant unfairness.” At paragraph 134, the Court of Appeal stated that “reapportionment will require something objectively unjust, unreasonable, or unfair in some important or substantial sense.” The Court of Appeal further stated that the threshold is high and that there “must be a real sense of injustice that would permeate the result if the court did not deviate from the presumptive equal division.”
3. What about family debt?
Pursuant to section 86 of the Family Law Act, family debt includes all financial obligations that is incurred by a spouse from the beginning of the relationship to date of separation. Family debt also includes any financial obligation incurred for the purpose of maintaining family property after the date of separation. This debt can be divided equally or unequally as above.
As per Hoffman v Miller, 2022 BCSC 678 at paragraph 186, tax debts that accrue prior to separation will be family debts whereas tax debts accrued post separation will not be family debts. Income tax fines and penalties are treated different. There is authority for the proposition that it is improper to treat fines or penalties arising from a tax debt as family debt (Chang v Chang, 2020 BCSC 1783 at para 89); and that penalties payable in relation to a party’s tax debt may go towards the issue of fairness (Chang v Chang, 2020 BCSC 1783 at para 89).
In Chang v Chang, 2020 BCSC 1783 at para 90, the Court found that income tax penalties assessed against Mr. Chang were not family debt. In Hoffman v Miller, 2022 BCSC 678 at para 189, there was no evidence about how much of the taxes, interest and penalties payable were attributable to pre-separation as opposed to post-separation income. The Court stated that it would be unfair to view fines, penalties and interest on income taxes as family debt.
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